4 Tips for Using Credit Cards to Make Large Purchases You Can’t Afford

A lot of people use credit cards to pay for things they can’t immediately afford. While credit cards are there for you to use, you must take notes of these precautions before you do so.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Apr 30, 2024


A lot of people like to use their credit cards to make large purchases that they can’t immediately afford. However, this can be a quite dangerous financial strategy given that the average credit card APR around 26%. With such a high-interest rate, an unpaid balance of S$1,000 can easily grow by S$300 in a year if you don’t pay it off. If you are not careful with your credit card usage, the interest you accrue can very quickly outweigh the amount you initially spent.

compounded credit card balance

That being said, we should not discredit the benefits of using a credit card. Credit cards remain one of the best ways to make large expenditures, especially in situations like a medical emergency, weddings or other important events when big spendings are unavoidable or even necessary. Most credit cards also provide an interest-free grace period of up to 30 days so you are able to delay you payments without penalties for a short duration. On top of that credit cards also provide rewards like cashback or miles which can add up quickly if you are making big purchases.

Compare The Best Credit Cards in SingaporeFind Out More

Below, we’ve prepared some tips to help you utilise these financial instruments even better to get what you need and avoid bad consequences of spending more than you can afford.

travelling and paying with credit card
Source: Pexels

1. Utilise 0% Interest Instalment Payment Plans to Spread Out Your Payment

There are some credit card issuers offer a 0% interest instalment payment plans. These plans allow you to make a huge purchase upfront with you credit card, and repay your card balance in smaller segments over 3 to 36 months without incurring any interest charges.

Do still exercise caution when using such services. It is always best to double check if your bank will charge you a rather high “processing fee” instead of interest to make a profit on your large transaction. Some banks will also not provide any rewards on the expenditure, robbing you of an opportunity to rack up points or miles on your big purchase.

Examples of Credit Cards With 0% Interest Instalment Payment Plans

Standard Chartered Smart Credit Card

Consumers who regularly spend on fast food, digital streaming subscriptions, breakfast joints and public transport might find the SC Smart Credit Card beneficial as it offers a 6% cashback with no minimum spend.

Standard Chartered Smart Credit Card


  • No cash advance fee
  • No annual fee
  • No minimum monthly spend


  • Complimentary travel insurance only covers the cardholder
More Details

CIMB Visa Signature

With CIMB Visa Signature Card, you can earn 10% cashback on online retail, beauty, pet shops, groceries, and cruise line transactions.

CIMB Visa Signature


  • Rewards online shopping, groceries and beauty spend
  • Rewards pet spend and cruises
  • No annual fee credit card


  • Lacks discounts on transport & petrol
  • Doesn't fit frequent travellers
  • 10% cashback is capped at S$100 per statement month
More Details

2. Do Not Max Out Your Credit Limit

Just because you can spread out your payments with an instalment plan to buy expensive things, it doesn’t mean you should go overboard. In fact, you should be very careful to leave a healthy buffer between how much you are spending through the 0% instalment plan and the credit limit you have.

The amount you put on the payment plan also counts towards your credit limit. Maxing out your 0% instalment plan will restrict you from using your credit card for other purchases until the payment plan is paid down. Once you set how long you will take to payback your 0% instalment plan, you won’t be able to change your instalment period without incurring a hefty penalty fee.

If you are not mindful with your spending you may find yourself in a situation whereby you are paying hundreds of dollars each month towards your instalment plan yet are unable to use your card for necessary daily expenses. This could drive you to take out even more credit, which could cause your credit card debt to spiral out of control. It is vital to have a buffer for your regular monthly expenses on top of any instalments payable when planning your budget to truly determine if you are able to afford the large purchase, even on an interest free instalment plan.

pay with credit card online
Source: Pexels

3. Always Pay Your Amount Due On Time

When it comes to credit cards, it’s imperative that you pay all of your amount due on time. Banks charge very high interest rates and fees on late payments which can snowball out of control if you miss your payment deadlines. No amount of rewards, miles or cashback would be able to cover these interest charges and fees.

On top of that, your payments need to be not only “timely”, but also be in full. Credit card statements will often show  the “minimum payment requirement”, which is typically 3% of your outstanding amount or S$50, whichever is higher. While it may be tempting to only make the minimum payment each month, doing so can actually result in you having to pay down your balance for upwards of several years as the remainder of your balance will continue to accrue interest.

The table below illustrates just how long paying down a S$10,000 credit card balance at 26% APR would take you, as well as the total interest charges you would pay, if you only make partial payments each month.

Monthly PaymentNumber of PaymentsTotal Interest Charges
*Source: Calculator.net

4. If You Can’t Pay Off Your Card Balance, Consider Alternatives

If you find yourself with a card balance that is already too large for you to pay off and not much time left on your 0% interest instalment period, there are still alternatives for you.

First, banks offer balance transfer loans that work similarly to 0% instalment plans. If you have a card balance that is coming due soon, you can avoid incurring huge interest charges on that amount by “transferring” it to a different account for a small processing fee. These loans typically have 3 to 18 months of 0% interest grace period, so you can buy yourself more time to pay off your credit card debt.

If your card balance is so huge that you couldn’t possibly pay it off within 12 to 18 months, then you should consider applying for a debt consolidation plan. These loans consolidate your various personal loans (including card debt) and spread out your payment over up to 10 years. While they charge an interest, their rates are less than half of what credit cards or balance transfer loans charge after their 0% interest grace period.

A third option is to apply for a personal loan. Similar to a debt consolidation plan, personal loans charge significantly less interest than credit cards. By using the personal loan to pay down your credit card balance, you could save yourself hundreds of dollars in interest over the months it takes you to repay the debt.

Now that you know how to prevent yourself from falling into crippling unsecured debt, you are ready to make your big purchase through your credit card. Check out our round up of the best credit cards in Singapore to make sure you maximise your rewards when you make your big life purchases.

Compare The Best Credit Cards in SingaporeFind Out More

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Cover image source: Pexels

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